The telecom equipment maker dragged RCom to bankruptcy court over the delayed payments and its petition against the telco and two units was accepted last week.Gulveen Aulakh&Devina Sengupta | ET Bureau | May 25, 2018, 09:48 IST

Negotiations between Reliance Communications (RCom) and Ericsson over the payment of pending dues have hit a fresh hurdle, with neither side agreeing on a timeline, even as experts said changes in the insolvency law may come to the rescue of the telco.

RCom chairman Anil Ambani is leading the discussions on behalf of the telco, according to people aware of the talks. The company is pushing for six months to make the payments owed to Ericsson, while the Swedish equipment maker insists on three months to get the dues of more than Rs 1,000 crore.

Ericsson is of the view that there was no rationale for waiting six months for the payment when the amount could “be recovered within the next three months,” the people said.

The telecom equipment maker dragged RCom to bankruptcy court over the delayed payments and its petition against the telco and two units was accepted last week.

That put on hold the operator’s plan to sell assets to reduce debt, forcing it to pursue an out-of-court settlement with Ericsson.

Resolving the issue may help RCom and its subsidiaries exit the insolvency process and pare debt of Rs 46,000 crore by selling assets including towers, fibre network and spectrum to Jio for Rs 18,000 crore.

Ericsson and RCom did not respond to ET’s queries on the discord over timelines. Both sides had earlier disagreed on the amount to be paid.

While the companies negotiate, a change in the Insolvency and Bankruptcy Code rules, which may soon be implemented by the government, may come to the aid of the beleaguered telco.

The government has proposed lowering the voting threshold for approval of resolution plans to a 66% majority of the lenders from 75% earlier and allowing withdrawal of an insolvency application if 90% of the creditors agree. The aim is to encourage a resolution plan instead of liquidation.

“It will be easier to get approval at the committee of creditors (CoC) in all cases including RCom. Another part is, now there will be a possibility of termination of insolvency process with the consent of 90% financial creditors. For instance, RCom can privately negotiate with Jio and after the deal, promoters may ask for termination of insolvency at CoC,” said Manoj Kumar, partner and head of M&A transactions at Corporate Professionals.

He added that the CoC consists of only financial creditors, not operational ones, so they may support a proposal of a deal with Jio if the transaction gets them good money.

Ericsson’s legal team said it is yet to receive details of the appeal.

“We had filed a caveat in the court and have not received the petition copy yet. The interim resolution professional has sent us the letter that they have sent to the arbitrational tribunal that proceedings there be kept in abeyance,” said senior counsel Anil Kher, who represents Ericsson.

The settlement amount being discussed was Rs 700 crore to 800 crore. Ericsson has also sought an undertaking that State Bank of India, one of RCom’s lenders, will pay up the dues if the telco does not clear the settled amount.